Ea As Strategy Ver1 0
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Transcript of Ea As Strategy Ver1 0
Enterprise Architecture as Strategy – Unpacked ver.
1-0
Creating a Foundation for Business Execution
Think ChangeWhat seems like only a ripple
today...Can become the wave of the
future
Overall Model – Foundation for Execution
The operating model is the necessary level of business integration and
standardisation for delivering goods and services to customers
The Enterprise Architecture is the organising logic for business
processes and IT infrastructure, reflecting the integration and
standardisation requirements of the organisations operating model
The IT engagement model is the system of governance mechanisms
that ensure business and IT projects achieve both local and company wide
objectives
Four Operating Models
Business Process Integration
High
Coordination•Shared Customers, products or suppliers•Impact on other business unit transactions•Operationally unique business units or functions•Autonomous business management•Business unit control over business process design•Shared customer / supplier / product data•Consensus processes for designing IT infrastructure services; IT application decisions made in business units
Unification•Customers and suppliers may be local or global•Globally integrated business processes often with support of enterprise systems•Business units with similar or overlapping operations•Centralised management often applying functional /process/ business unit matrices•High-level process owners design standardized processes•Centrally mandated databases•IT decisions made centrally
Low
Diversification•Few, if any shared customers or suppliers•Independent transactions•Operationally unique business units•Autonomous business management •Business unit control over business process design•Few data standards across business units•Most IT decisions made within business units
Replication•Few if any, shared customers•Independent transactions aggregated at a high level•Operationally similar business units •Autonomous business unit leaders with limited discretion over processes•Centralised (or federal) control over business process design•Standardised data definitions but data locally owned with some aggregation at corporate•Centrally mandated IT services
Low High
Business Process Standardisation
Applying the Operating Model
Business Process Integration
High
Coordination•Organic: stream of product innovations easily made available to existing customers using existing integrated channels•Acquisition: can acquire new customers for existing products but must integrate date
Unification•Organic: leverage economies of scale by introducing existing products/services in new markets; grow product line incrementally•Acquisition: can acquire competitors to leverage existing foundation; must rip and replace infrastructure
Low
Diversification•Organic: small business units may feed core business; company grows through business unit growth•Acquisition: unlimited opportunities; must ensure shareholder value
Replication•Organic: replicate best practices in new markets; innovations extended globally•Acquisition: can acquire competitors to expand market reach; must rip and replace
Low High
Business Process Standardisation
Implementing the Operating Model via Enterprise Architecture
Enterprise Architecture for a Unification Model
Linking and automating technologies
Shared Data
Linked and standard (core) processes
Key Customers
Automating Technologies
Linking Technologies
Required
Optional
Business Process
Data
Technology
Customer Types
Pro
cess
Ou
tcom
e
Enterprise Architecture for a Diversification Model
Business-unit-specific customers
Business-unit-specific data
Shared Processes
Shared Technologies
Technology
Stack
Required
Optional
Business Process
Data
Technology
Customer Types
Pro
cess
Ou
tcom
e
Enterprise Architecture for a Coordination Model
Linked Processes
Integrating Technology
Shared Data
Shared Customers
Required
Optional
Business Process
Data
Technology
Customer Types
Pro
cess
Ou
tcom
e
Enterprise Architecture for a Replication Model
Business-unit-specific customers
Business-unit-specific data
Automating and linking technologies
Standardised Processes
Required
Optional
Business Process
Data
Technology
Customer Types
Pro
cess
Ou
tcom
e
Navigate the Stages of Enterprise Architecture Maturity
Stages of Enterprise Architecture Maturity
1. Business Silos Architecture: – Where companies look to maximize individual business
unit needs of functional needs
2. Standardised Technology Architecture: – Providing IT efficiencies through technology
standardisation and, in most cases, increased centralisation of technology management
3. Optimised Core Architecture:– Which provides company wide data and process
standardisation as appropriate for the operating model
4. Business Modularity Architecture:– Where companies manage and reuse loosely coupled IT-
enabled business process components to preserve global standards while enabling local differences
Architecture Maturity StagesArchitecture Maturity
Business Silos Standardised Technology
Optimised Core
Business Modularity
Percentage of IT Investments
100%
1. Applications align naturally with a company’s business unit, functional or geographic structure.
2. On-off Solutions are created which cannot talk to each other.
3. Obstruction of integration and standardisation of business processes.
4. Role of IT is to automate specific business processes.
1. Establishment of technology standards intended to decrease the number of platforms.
2. Role of IT is to automate local business processes
3. Negotiate the best possible solution given the acceptable technology platforms.
4. Consolidated an standardised hardware, reduces the number of software products performing similar functions.
1. Enterprise view of data and applications.
2. Elimination of data redundancy by extracting transactional data from individual applications and making it accessible to all appropriate processes.
3. Once optimised and digitised, making fundamental changes to business processes or data becomes more difficult, but building new products on the core becomes easier.
1. Strategic agility through customised or reusable modules.
2. Reusable modules allow business units to select customer orientated processes from a menu of options.
3. Reusable business services with standard interfaces.
4. Modularity does not reduce the need the need for standardisation.
5. Reusable modules will build a thicker, denser core, providing greater efficiencies while allowing local customisation.
Local Applications
Enterprise Systems
Shared Infrastructure
0%
Shared Data
Changes in organisational flexibility through Architecture Stages
Architecture Maturity
Business Silos Standardised Technology
Optimised Core
Business Modularity
High Flexibility
Global Flexibility
Local Flexibility
Low
Flexibilit
y
Learning requirements of the Architecture Stages
Business Silos Standardised Technology
Optimised Core
Business Modularity
IT Capability
Local IT applications Shared Technical Platforms
Companywide standardised processes or data
Plug-and-play business process modules
Business Objectives
ROI of local business initiatives
Reduced IT costs Cost and quality of business operations
Speed to market; strategic agility
Funding Priorities
Individual applications Shared infrastructure services
Enterprise Applications
Reusable business process components
Key Management Capability
Technology enabled change management
Design and update of standards; funding shared services
Core Enterprise process definition and measurement
Management of reusable business processes
Who defines Applications
Local Business Leaders IT and Business unit Leaders
Senior Management and process Leaders
IT, business, and industry leaders
Key IT Governance
Issues
Measuring and communicating value
Establishing local /regional/global responsibilities
Aligning project priorities with architecture objectives
Defining, sourcing, and funding business modules
Strategic Implications
Local / Functional optimisation
IT Efficiency Business Operational Efficiency
Strategic Agility
How to apply Architecture Maturity Stages in Your Company
• Focus architecture on strategic organisational processes– No company can afford to eliminate all its silos
• Move incrementally– Skipping stages leads to either failures or delayed benefits
• Recognise that complex organisations have enterprise architectures at multiple levels– Architectures at different levels of the company support
different business objectives• Build an architecture capability-in-house
– Business Strategy and IT Architecture requires a close relationship
• Aim for Business Modularity– More-mature architectures reported greater success in
achieving strategic goals
Cash In on the Learning
• Reduced IT Costs– IT Operations unit costs– Application maintenance costs
• Increased IT Responsiveness• Improved Risk Management
– Reduced business risk– Increased disaster tolerance– Reduced security breaches
• Increased Management Satisfaction– Greater senior management satisfaction– Greater business unit leader satisfaction
• Enhanced Strategic Business Outcomes– Better operational excellence– More customer intimacy– Greater product leadership– More Strategic agility
The Benefits of Enterprise Architecture
Enterprise Architecture Management Practices
Rating
Processes 1 2 3 4 5Centralised funding of enterprise applications
Enterprise Architecture guiding principles
Standard Project management Methodology
Business Cases for architecture investments
Formal Compliance Process
Annual Infrastructure renewal funding
One-page enterprise architecture graphic
Formal Architecture exception process
Formal Technical Research and Adoption Process
Post-Implementation Assessment
Enterprise Architecture Management Practices
Rating
Roles 1 2 3 4 5Full-time enterprise architecture team
IT Architects on project teams
IT Program Managers
Full-time centralised technology standards team
Business Leadership of Project Teams
Enterprise-level process owners
IT steering committee
Senior Business Executives architecture oversight
How Architecture Management Practices Evolve
Business Silos Standardised Technology
Optimised Core Business Modularity
Business Cases
Project Methodology
Architects on Project Teams
IT Steering Committee
Architecture exception Process
Formal Compliance Process
Infrastructure renewal Process
Centralised Funding of enterprise applications
Centralised standards Team
Process Owners
Enterprise Architecture guiding principles
Business Leadership of project teams
Senior Executives oversight
IT Program Managers
Enterprise architecture core diagram
Post-Implementation assessment
Technology Research and adoption process
Full time enterprise architecture team
Build the Foundation One Project at a Time
The IT Engagement Model
• Companywide IT Governance:– Decision rights and accountability framework
to encourage desirable behaviour in the use of IT
• Project Management:– Formalised project methodology, with clear
deliverables and regular checkpoints
• Linking Mechanisms:– Processes and decision-making bodies that
align incentives and connect the project-level activities to the overall IT Governance
The IT Engagement Model
Companywide IT Governance
Company strategy
and operations
Enterprise Architecture
Business unit
strategy and
operations
Business unit
architecture
Project Plan Project IT architecture
Project Management
Business IT
ALIGNMENT
CO
RD
INA
TIO
N
Linking mechanisms
Company Level
Business unit Level
Project team Level
Types of Linking Mechanisms
Companywide IT Governance
Project Management
Business
IT
Enterprise Level
Business unit Level
Project Level
Business Linkage• Program Prioritisation• Business sponsors for
projects• Early stage involvement
of people representing companywide objectives (e.g. Hot housing)
• Regular project reviews conducted by company level office
• Post-Implementation review tied to company goals
• Bonuses and incentives tied to company goals
• Process owners
Alignment Linkage• Business-IT relationship managers• Project Management Office• Project Management Training
Architecture Linkage• Project Teams including architect• Architecture exception
management• Architecture Training• Project Funding and continuation
dependent upon architecture compliance
Use Enterprise Architecture to Guide Outsourcing
Outsourcing Objectives
Efficiency Objectives
Cost Reduction
Variable Capacity / Expertise on demand
Architectural Improvement Objectives
Re-engineering internal business processes
Increase business process discipline
Strategic adaption objectives
Management focus on competencies
Strategic Agility
Leverage new IT
Mitigate technology risks
Technology / expertise transfer
Three Outsourcing Models
Strategic Partnership
Co-sourcing Transaction
What is outsourced
Broad responsibility for operational activities
Project Management and implementation
Narrowly defined, repeatable process
Key Metrics Bottom-line impact Project success Quality and/or cost per transaction
Client-vendor relationship
Negotiated accountability Joint project management
Arms length
Client Expectations
Cost savings; variable capacity; management focus on core competencies
Cost savings; access to expertise on demand
World-class processes; variable capacity; management focus on core competencies
Vendor offerings
Capability to deliver broad range of specialised services; integration expertise; disciplined practices; economies of scale
Labour arbitrage; project management expertise; expertise on specialised technologies
Standard best practice process components; economies of scale; distinctive platforms or assets
Three mutually exclusive outsourcing Models
Different outsourcing relationships are suited to different stages
Business Silo Standardised Technology
Optimised Core Business Modularity
What to outsource
Easily Isolated processes
IT infrastructure management
Project Management of major systems implementations
Process design and operation with supporting technology
Ideal Relationship
Narrowly focused transaction outsourcing Strategic Partnership
Co-sourcing allianceTransaction outsourcing
Achievable outsourcing objectives
Cost Savings IT Management discipline; cost savings; cost savings; risk reduction; management focus
Technology / expertise transfer; process discipline and re-engineering; management focus; cost-effectiveness; variable capacity; risk sharing
Strategic agility; leverage IT and process expertise for world-class business processes; variable capacity; management focus; cost effectiveness; risk sharing
Sources of Reference
• J.W.Ross, P. Weill, D.C. Robertson, Enterprise
Archictecture as Strategy, 2006, Havard Business
School Press. ISBN: 1-59139-839-8
• http://www.architectureasstrategy.com
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